Saurabh Mukherjea settles insider trading case with Sebi, pays Rs 1.38 cr

Sebi issued a show-cause notice to Mukherjea in May 2019.
Saurabh Mukherjea, the former chief executive officer (CEO) of Ambit Capital, has settled a case of alleged breach of insider trading and fraudulent trade practices regulations. Mukherjea, a noted analyst and money manager, paid the Securities and Exchange Board of India (Sebi) Rs 1.38 crore for the settlement.

Mukherjea, in 2013, allegedly procured price-sensitive information from senior officials of Mannapuram Finance (MFL) and communicated the same in a research report.

Saurabh Mukherjea has not maintained the confidentiality of the price sensitive information and has thereby violated Regulation 12(1) (e) of the Sebi (PIT) Regulations, 1992 read with clause 2.1 and 2.2-1 of the Code of Conduct for Prevention of Insider Trading for Other Entities as specified in Part B of Schedule I of SEBI (PIT) Regulations, 1992. Further, the act of commission of releasing research report prior to making the information public resulted in fraud on innocent investors, who were not privy to the said price sensitive information and dealt in the scrip of MFL during 19th and 20th of March 2013 was in violation of Section 12A(c) of SEBI Act 1992 read with Regulation 3(d) of SEBI (PFUTP) Regulation, 2003,” said the regulator in an order.

PIT stands for prohibition of insider trading and PFUTP stands for prohibition of fraudulent and unfair trade practices.
MFL, in the minutes of its board meeting held on March 13,2013, indicated that contrary to the expectations, the company could report a loss for the quarter ended March 2013. Mukherjea, at a meeting held on March 18 with MFL’s senior officials, obtained this price-sensitive information and later published the same in a research report.

When MFL announced its March quarter numbers on May 15, 2013, its scrip had declined 6 per cent, as per the Sebi order.

Sebi issued a show-cause notice to Mukherjea in May 2019. In July 2019, he submitted an application to settle the matter under the Settlement of Administrative and Civil Proceedings Regulations—popularly known as consent route.

Under this route, an applicant can settle a pending matter with the regulator without admitting or denying the charges by paying a fee or undergoing a market ban or both.

Mukherjea quit Ambit Capital in April 2018 after an eight-year stint. In August 2018, he set up Marcellus Investment Managers, a provider of portfolio management services (PMS). Since inception, Marcellus’s PMS schemes have managed generate stellar returns, outperforming the benchmark indices.

"Given that it has been over seven years since the events at heart of the matter transpired, I felt that it was appropriate to apply for settlement and move forward. I respect Sebi's decision and am grateful to them for disposing the matter," Mukherjea said.

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